Grygo is the chief content officer for FTF.
It’s next to impossible to predict what the major trends in securities operations will be in 2021.
The industry is still focused on what the new world will be after the fatal COVID-19 pandemic is defeated by vaccines and new behaviors. We may be in a holding pattern for at least the first six months of next year, if not longer.
In the meantime, the only trend that I foresee as continuing is more collaboration between established financial services players and the upstart providers of cutting-edge technology, solutions, and services.
A case in point is the news last week that American Express Ventures has invested in FalconX, a firm, based in San Mateo, Calif., that has launched an “all-in-one” digital asset trading platform.
Raghu Yarlagadda, the CEO and co-founder of FalconX, says that he cannot disclose the amount that American Express Ventures has invested in his company. But he will say that it has the financial support of Accel, Accomplice VC, Coinbase Ventures, Fenbushi Capital, Flybridge Capital Partners, Lightspeed Venture Partners, and Avon Ventures, “a venture capital fund affiliated with FMR LLC, the parent company of Fidelity Investments.”
I think FalconX’s description of what it does may help explain why it has gotten so much VC attention.
“Trading as principal, FalconX provides institutional clients the ability to access cryptocurrency markets seamlessly through a single platform for trading, credit, and clearing,” according to FalconX. “Today’s cryptocurrency infrastructure is inefficient for financial institutions — relying on a complex combination of liquidity sources across different markets.”
As proof that it’s on the right track, FalconX reports that it has had a spike in revenue growth of 350 percent since its last round of funding in May 2020, and that it serves 250 institutional clients, which is an increase of 150 percent, also since May 2020. In addition, it is experiencing transaction volumes that “have tripled to around $3 billion on a monthly basis.” Its new product line, FalconX Credit, which helps clients extend settlement, hit more than $1 billion in credit transactions during November 2020.
“We’re seeing growing interest from traditional asset managers who are adding cryptocurrencies as an inflationary hedge, catalyzed by recent macro-economic policies,” Yarlagadda says, in a prepared statement.
In a statement just for me, Yarlagadda very kindly responded to my odd question about how he and his co-founders picked the name for their new enterprise.
“In 2010, I promised my wife that we’ll go to another planet in this lifetime. What started out as a joke slowly became our life’s mission ever since — to begin a deep internal and external exploration,” Yarlagadda tells FTF News.
Raghu Yarlagadda
“In our minds, falcon personifies freedom, aspiration, and growth like SpaceX’s Falcon launch vehicle, which can facilitate that external exploration to Mars. Falcon is also the national bird of UAE [United Arab Emirates] where my co-founder Prabh [Prabhakar Reddy] grew up, and he had a falcon sticker on every book growing up. We started with FalconX as a placeholder, but we continued because customers loved it.”
As FalconX and many companies like it bring their passion to “the tokenized economy of the future,” they will still need the support of Old School players to make it all happen, including those who are steeped in the mysteries of operations.
So, I am refraining from making a list of grand predictions for 2021. This year has shown the financial services industry that a lot of what it does still works and can be modified for pandemic conditions. But such a challenging year has also let financial services firms know that parts of their business may fall away for good — everything from renting expensive commercial office space to paper-based transactions.
The one thing that I am sure of is that many players — new and established — are prudently getting themselves ready for when the world is in a safer place. Once that’s the case, everyone will be rushing ahead to new opportunities.
Until then, safely enjoy and savor the holidays of the winter season and keep hope alive for next year.
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